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Cost-Benefit Analysis of Powdered Camel Milk Production in the Somali Region of Ethiopia

Author

Listed:
  • Kehinde O. Olusoga

    (Department of Banking and Finance, Eastern Mediterranean University, North Cyprus)

  • Mikhail Miklyaev

    (Department of Economics, Queen’s University, Kingston, Canada and Senior Associate/ economist Cambridge Resources International Inc.)

  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)

Abstract
The Somali region of Ethiopia has a high potential for milk production. The perishable nature of raw camel milk imposes a significant loss to the pastoralists and the economy. This study assesses the ex-post evaluation of the milk processing plant in Jijiga city, the Somali region of Ethiopia, by identifying the risk variables that affected the outcome of the project. Also, we employ a Cost-Benefit Analysis to evaluate a possible solution to the milk processing plant by appraising the financial viability of powdered camel milk production and identifying the potential risks that might affect the outcome of the project. The milk production plant will process raw camel milk to powdered form to benefit from the seasonal fluctuation of camel milk supply because of the higher shelf life of powder camel milk. Although there is potential growth in the camel milk value chain in Ethiopia, market access is one of the major limitations of camel milk production. There has been an increase in the demand for powdered camel milk globally due to the awareness of its physiochemical properties, health benefits, and higher shelf life. By 2027, the camel milk global market is projected to hit USD 10.07 billion, rising at an 8 percent growth rate. The result of the Cost-Benefit Analysis (CBA) shows that the powdered camel milk production project will generate an NPV of 38.47 million ETB and a MIRR of 26.6%. The minimum ADSCR is 1.93, the average ADSCR is 5.95, the minimum LLCR is 4.34, the average LLCR is 7.47. The project’s sensitive variables are the exchange rate, the export price of powdered camel milk, raw camel milk price, and the milk processing capacity.

Suggested Citation

  • Kehinde O. Olusoga & Mikhail Miklyaev & Glenn P. Jenkins, 2021. "Cost-Benefit Analysis of Powdered Camel Milk Production in the Somali Region of Ethiopia," Development Discussion Papers 2021-05, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4571
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    References listed on IDEAS

    as
    1. Rajagopal, 2014. "The Human Factors," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 9, pages 225-249, Palgrave Macmillan.
    2. Glenn P. Jenkins & Mikhail Miklyaev, 2014. "Cost-Benefit Analysis Of A Milk Processing Plant For The Benefits Of Pastoralists, Somali Region, Ethiopia," Development Discussion Papers 2013-09, JDI Executive Programs.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cost-Benefit Analysis; ex-post evaluation; financial analysis; Risk analysis; Powdered Camel Milk; Somali Region; Ethiopia.;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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